St. Joe Buyer Backs Out

Interesting news from St. Joe:

One of the recent mysteries at St. Joe is: What happened to this $130-million land deal earlier this fall for 67,365 acres of conservation land in Liberty, Jefferson, Gulf and Franklin counties? St. Joe terminated the sale but never identified the buyer or why the contract soured. Now the land is back on the market.

Today's enterprise value is 2.27 billion. On September 30, 2008, JOE owned approximately 607,000 acres, concentrated primarily in Northwest Florida. So that values the land at $3740/acre.

But they just lost a deal to sell 11% of their land for $1930/acre (about half of the EV/acre amount). Apparently they also have around 40k paper lots. But lots are a residual function of builder profit margins, which are practically nonexistent right now.

I maintain a small short position in JOE.

“I didn’t know that you weren’t supposed to put a sell rating on companies."

Great quote:

"The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. 'I put a sell rating on the thing because it was a piece of shit,' Eisman says. 'I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.'"

Great American Short: COF

I am officially bearish on Capital One.

Big lenders — like American Express, Bank of America, Citigroup and even the retailer Target — have begun tightening standards for applicants and are culling their portfolios of the riskiest customers. Capital One, another big issuer, for example, has aggressively shut down inactive accounts and reduced customer credit lines by 4.5 percent in the second quarter from the previous period, according to regulatory filings.

Too little, too late?

Analysts Tell You What Just Happened

"He’s got a chart to illustrate that analysts are exceptionally good at one thing and one thing alone - telling you what has just happened."

California Tax Revenue in September 2008

Compared to September 2007, General Fund revenue in September 2008 [pdf], was down by $465 million (-4.4%). Corporate taxes were below estimate by $485 million (-21.0%), and personal income taxes were below last September by $26 million (-0.5%). Sales taxes were $71.7 million greater (3.5%) than last year. The total for the three largest taxes was below 2007 levels by $440 million (-4.4%).

New Deal #2

Good comment from Sovereign Speculator, a favorite new blog along with Capital Observer.

In this case, we are clearly being prepped for New Deal #2, involving at least the following programs:

• Public works projects. A resurrection of the Works Progress Administration (aka WPA or “We Piddle Around”).
• Green energy waste. The Tennessee Valley Authority with a touchy, feely twist. Al Gore, administrator?
• Neverending War in Asia. That’ll lick unemployment for good!

The Paulson Heist is Actually Unlimited, Not Just $700 Billion

Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.